The 22 RESIST scenarios highlight a wide variety of corruption risks often encountered in many types of commercial dealings with public officials and commercial partners.
Many scenarios call for common responses that are applicable to most solicitation situations. While the answers are partially repeated in the individual scenarios, this annex provides an overview of generic responses to demands for these types of payments, as well as addressing major aspects of these individual risks.
The suggested actions below are intended as a broad, but not exhaustive, spectrum of practical actions to avoid or combat solicitation or extortion scenarios. Not all of them will be relevant in each situation, nor will all of them be feasible depending on the size of companies and their resources. Further, these are intended as practical suggestions, but are not intended as alternatives for sound ethical management judgment and common sense, based on appropriate professional legal, accounting, tax and other specialized advice when addressing a specific situation, in particular the advice necessary to understand and comply with national laws and regulations.
Demand prevention: How to reduce the probability of the demand being made? General company anti-corruption policies • Implement and enforce a zero tolerance anti-
bribery policy based on applicable laws and ethical values
• Establish a no-bribe and zero tolerance reputation by publicizing anti-corruption policies efforts and the related anti-corruption programme
• Ideally, policies should be publicly available, but they should at least be available to all employees, business partners, relevant government agencies, charities, labour unions and other relevant
stakeholders
• Set up clear company directives including a whistleblowing policy and related effective sanctions for non-compliance
• Provide training to operational and field personnel on relevant regulations and competition laws, the consequences of bribery and anti-competitive deals for the company and the involved
whom to report such demands
• Emphasize in training sessions the criminal and reputation risk not only for the company but also for the exposed employees themselves
• Send regular reminder communications to exposed employees
• Provide competitive remuneration for your company staff at risk to reduce incentives to solicit and/or accept kickbacks
• Require high risk employees to sign a code of conduct statement regularly
• Introduce anti-corruption clauses and audit rights in contracts with business partners, e.g. suppliers and sub-contractors, agents and consultants • Ensure that employees understand they should
not refuse payment if faced with threats of violence
Policies on facilitation payments
• Facilitation payments are small-value payments made to low-level officials to secure or expedite the performance of routine or necessary actions to which the payer has legal or other entitlement • This is a widespread form of bribery, despite
being illegal in almost every country
• Whenever feasible for your operations, implement a zero-tolerance policy against facilitation
payments
• Otherwise, implement a policy that rejects facilitation payments whenever possible, permitting only payments that are clearly
unavoidable, requiring clear documentation of any such payment and having as an ultimate goal the elimination of such payments
• Clearly identify the limit of a facilitation payment, e.g. maximum US$ 100 made on a one-off basis or only occasionally to the recipient
• Make demanding facilitation payments more difficult, e.g. having employees advise officials demanding payments that they must record and escalate within the company the payment and the relevant details, including the official’s name • Ensure that employees can quickly contact
managers or other designated persons when faced with payment demands
• Work with other companies and international organizations towards eliminating facilitation payments, e.g. agreeing with competitors in a market that all of them will refuse to make such payments
• Train and discuss anti-corruption policies with relevant personnel before the start of a project: - Identify and openly address incentives to pay
bribes
- Introduce “excuse pages” that explain why the usual answers and justifications that bribes need to be paid are not valid
- Perform background checks on personnel involved in transactions and/or projects, including potential conflicts of interest, while respecting applicable employment and data privacy laws and other legal considerations - Provide training to at-risk personnel on the consequences of bribery (legal, financial, reputational, etc.)
- Prepare employee guidance on how to respond to bribery demands (i.e. whistleblower hotlines, compliance training and consultation) that incorporates cultural, industry and function specific advice
• Consider incentives to report bribery demands - Before, during and after projects and/or
transactions, prohibit or strictly regulate gifts, entertainment, hospitality, sponsorship and political and/or charitable contributions activity through policy, guidance, training and a formal approval process
o Establish thresholds appropriate to the local environment
o Zero tolerance policy for parties directly or indirectly involved in the bid process • Consolidate disbursement mechanisms for
personnel involved in projects and/or transactions - Avoid petty cash funds that would enable staff
to respond positively to any solicitation
- Avoid cash payments whenever possible, using instead checks or electronic transfers
- Consolidate bank accounts
- Conduct a risk management review to approve the opening of project-based accounts
- Be clear with your employees about categories of expenses for which claims for reimbursement will be approved or rejected or for which a prior application should be made, to avoid the risk of
comply with strict reporting directives and control mechanisms
• When meeting with other parties, request to be accompanied by a lawyer, other professional adviser or another third party to reduce the probability of being asked for a bribe
• Be on alert for inappropriate schemes; consult experts familiar with international transactions (financial, tax and legal) where concerns exist
• Set up an action plan, in particular security measures, that can be relied upon to anticipate and manage the retaliation risk against people and assets of your company as the result of the rejection of a solicitation or extortion attempt – the protection of the exposed staff is of paramount importance
Dealing with specific risks
• Establish a zero tolerance policy against payment or receipt of kickbacks from private business partners
- Treat bribery of public officials or business partners the same
- Ensure that business partners are aware of the kickback policy
• Have a clear policy addressing conflicts of interest:
- Require all employees to state any economic or other personal interests they might have directly or indirectly in any project or transaction or in any third party having any business, financial or regulatory dealings with your company
- Ensure whenever possible that employees with potentially significant conflicts of interest are not involved in such projects or transactions - If it is not possible to isolate employees from
such projects or transactions, ensure that their roles are completely transparent and that they obtain no undue gains
- Ensure that transactions and projects are transparent and planned and executed according to clear, objective standards and procedures, e.g. if your company funds a research and development project at a
hospitality are permitted, e.g. travel expenses, dining, entertainment and lodging
- Ensure that guidelines state permitted cost thresholds or give clear examples of permitted cost levels
- Ensure that employees can quickly obtain guidance when arranging gifts or hospitality • Have a clear policy addressing political and/or
charitable contributions and sponsorship - Clearly describe what types of contributions/
sponsorships at which levels are permissible, and clearly identify permissible recipients - Balance the benefits of legitimate contributions/
sponsorships with the risks of donations being perceived as bribes, e.g. taking into account local customs and laws
- Establish a group implementing the contribution/sponsorship policy, with
transparent and well documented procedures - If payments are made to unions or other
employee groups, ensure that amounts, payment procedures and dates, and all relevant persons are identified, and ensure payments are made directly into bank accounts of the organizations in question
• Have a clear policy and clear guidelines on obtaining payment of outstanding receivables to avoid kickback demands
• Publicizing company anti-corruption materials, e.g. policies and guidelines, is encouraged, because this sends a strong message to employees, business partners and other stakeholders about a company’s firm stand against corruption
Due diligence and management of agents and intermediaries
• Perform due diligence on agents, consultants and other intermediaries (including their owners and managers) involved in dealings with government agencies or business partners:
- Identify “red flags” since these parties are often used to pay bribes to public officials, extortionists, e.g. family relationship with public officials, no registered office, refusal to reveal owners4
- Eliminate any intermediaries that are non- essential to the project or transaction - Implement risk management/compliance
approval for payments to intermediaries - Ensure the level of proposed compensation
for the intermediary is commensurate with the nature and scope of services and whether the services are legitimate ones; document this
account in a bank located in the country of the intermediary’s operations – never pay cash • Have clear guidelines governing selection of
intermediaries, e.g. who has the authority to hire, criteria for selection, use of standard contracts – the need for an intermediary must be justified • Ensure internal authorizations are obtained by
appropriate corporate officials (at least one of the two approvers must have no personal sale incentives) prior to engaging a consultant or agent and making any fee payments
• Enter into written agreements with intermediaries that include description of services provided, anti- corruption undertakings, maximum commission, termination and legal compliance clauses, including prohibition against payments to public officials and the right to audit intermediaries’ accounts
• Ensure, if necessary, that all payments made by intermediaries are approved and/or co-signed by the company, and that company employees or representatives (e.g. lawyers) attend meetings between agent and public officials
• In large companies, establish and review each year lists of approved intermediaries
Implementation of additional control procedures
• Before beginning operations in a country, ensure that your company has sufficient knowledge of relevant rules and procedures involving: - Legal requirements for obtaining necessary
approvals and permits
- Processes for obtaining permits and licenses required for conducting business in a country, including:
o Health, workplace and product safety and environment
o Employment permits
o Passport, immigration, border controls
o Customs duties, procedures and payment rules, such as official rules for expedited service for higher fees
o Time-frames for processing applications - Tax regulations, including procedures for tax
payment to official agency accounts - Before negotiating contracts, dealing with
government agencies or beginning operations, obtain professional advice on:
o Relevant laws
o Accounting rules and procedures - Linking up to utilities and infrastructure, e.g.
electrical and telecommunications networks, water, roads, ports, including the timeframe
• Ensure that your company complies with all relevant regulations and official requirements for operations in a country
• Identify relevant key public officials and make them acquainted with your company and its anti- corruption policy and programmes
• Challenge illegitimate claims by public officials after seeking professional advice
- Attend negotiations and other meetings only when accompanied by professional advisers - Challenge illegitimate claims in courts when
necessary
• Review payments involving heightened risk: - To bank accounts with financial institutions
outside the project location, to tax havens or to countries maintaining banking secrecy
- Require a bank certificate confirming the identity of the owner of the bank account to be credited
• Ensure contracts clearly state rules and
procedures for contract amendments, including who pays costs incurred by one party as a result of the other party’s request for an amendment, who approves, notice period, criteria for agreement
• Implement contract clauses and procedures to ensure payment of your invoices:
- Letters of credit
- Early payment incentives, penalties for late payment
• Elevate concerns about and evidence of solicitation of bribes
- Internally in your company to senior management
- To relevant public officials
o Supervising those soliciting bribes
o Higher in the government, as required - The embassy of the country where your
company is headquartered
- Other stakeholders, including other companies, non-governmental organizations (NGOs) or the media as appropriate
o In particular, contact companies that also are involved in anti-corruption activities, e.g. through local ICC or UN Global
• Engage in a dialogue with agencies to improve procedures in the following areas:
- Encourage adoption of best practice procurement guidelines (World Bank/OECD) - Make the procurement process transparent,
including the publication of terms of reference - Work with other stakeholders (e.g. civil society
organizations) to influence procurement agency to adopt best practices
- Favour the establishment of an Integrity Pact (a tool developed by TI to fight corruption in public contracting)5, or a similar type of
agreement, between the local public authority and the various competitors, in order that all participating officials and bidding companies commit to not soliciting, offering, giving or accepting bribes or other undue benefits - Secure agreement from the procurement
agency on the appointment of an independent (i.e. no conflict of interest) third party (e.g. competent individual, company or NGO, or international organization such as the World Bank) to supervise the entire bidding process - Request a pre-qualification round to exclude bidders lacking technical and financial delivery capacity (either through their own organization or relevant contractors)
- Suggest that all bidders should as a pre- qualification requirement have implemented anti-corruption policies and related
programmes
- Agree with the procurement agency that no intermediaries can be added to the process after bid submission
Additional precautions in the procurement process involving state tenders
• Include assessment of corruption risk as standard procedure when selecting proposal opportunities • Assess corruption risks at the project level before
engaging in bidding process
• When bidding for large contracts, favour
sales team involved in the bid if the size of your organization allows it
• Carry out formal vendor review and approval process
• Use open bids for subcontracting activities whenever and wherever possible
• Hold regular market reviews of marketing fees per country
- To agents/consultants/advisers used in the bidding process
- To bank accounts with financial institutions outside the project location, to tax havens or to countries maintaining banking secrecy
• Require a bank certificate confirming the identity of the owner of the bank account to be credited • Train and discuss anti-corruption policies with
personnel involved in the procurement process before the start of the project
• Implement a regular, independent internal monitoring function that reports to a senior executive on:
- High risk payments to agents/consultants or to financial institutions outside of the project location
- Regular, timely and detailed review of bidding process documentation
• Seek relevant information from major enterprises, embassies, export credit agencies, banks or trade associations about the business practices in that country
• Consult country profiles on online tools such as www.business-against-corruption.com
• Assess level of enforcement of existing anti- corruption policies and laws
• Monitor the living standards of the members of the body defining the terms of reference/ procurement agency
Initiation of collective action to improve overall business integrity
• Encourage local professional and business associations and NGOs to engage with the government to enact laws and rules for transparent projects and transactions • Seek the leverage of international financial
institutions to enhance the quality and predictability of public procurement
• State in contracts that contractual disputes will be submitted to international arbitration on neutral ground
• Provide contractually for disputes to be submitted to the jurisdiction of the International Centre for the Settlement of International Disputes if the host country and the country of the investor are parties to the ICSID Convention
• Apply for guarantee by the Multilateral Investment Guarantee Agency (MIGA) if the host country and the country of the investor are MIGA members, or by a similar national organization of the country of the investor
Responses to a bribery demand: How to react if the demand is made?
Immediate response
• Take time to think about the situation, do not act alone, and stick to your mandate
• Answer that the solicitation (direct or indirect) is to be made in writing and needs to be reported to your management
• Refuse payment on the grounds that any solicitation violates the business principles of your company and may violate applicable laws such as those covering accounting and/or anticorruption in your country and/or the host country, and money laundering, and could lead to the dismissal and criminal prosecution not only of the employees concerned but also of the soliciting party
Report internally
• Immediately report to management or the
appropriate officer assigned with matters involving the code of conduct (e.g. compliance officer) and define an appropriate strategy (e.g. changing the negotiation team)
• Record the incident and make an internal assessment to define corrective actions Investigate
• Investigate the deal and the intermediary, as well as past deals with the same counterparties (customer, authorities, etc.) and/or intermediary in same country or even other countries
• Include legal, operational and risk management specialists
• Retain investigation results for both legal implications and future risk assessments
• Go back to the soliciting person or his/her superior with at least one witness (management, adviser, bank representative) with the following position:
- Reaffirm your willingness to do business, perform the project or transaction, carry out the activity and ignore the solicitation
- In case the solicitation is reiterated:
o First, inform the person that the request is not acceptable
o Threaten to refuse to participate further with public communication of the reasons for doing so
o Stop further participation • Report (directly or anonymously) to the
appropriate level of the organization allegedly represented by the person demanding the bribe - Assess whether the demand is part of systemic
corruption or simply the action of a rogue employee
o Rogue employees – expose to superiors
o Systemic corruption – report to
organization (directly or anonymously) and superiors
• Explain to the persons making the solicitation that the proposed scheme could expose all the parties (individual and company) to a prosecution risk not only in the country where the deal occurs but also in OECD countries under regulations fighting corruption or money laundering
• Convene meetings of all parties and discuss potential challenges to successful dealings such as requests for bribes, without disclosing too many details this should serve as a deterrent to the guilty party
If suspicions are substantiated, disclose externally
If your suspicions are substantiated, disclose externally to:
• Government – use various governmental agencies to report corrupt organizations
• Embassy or consulate representing your home
bribery demands that may stem from officials of a state-owned company
• Media/NGOs: Leverage public scrutiny of bidding process
Withdraw
• Withdraw from the project or transaction and disclose the reasons for the withdrawal to the public, to international organizations and/or selected officials of the country organizing the